Upgrades that pay off

Bathrooms offer biggest payback, not fancy kitchen appliances

October 16, 2005|By JOANNE Y. CLEAVER | JOANNE Y. CLEAVER,MILWAUKEE JOURNAL SENTINEL

Tiles chip, dishwashers quit, but space is forever.

Bigger houses sell for more money.

In the algebra of remodeling, homeowners try to balance an equation composed of two sets of factors: what they want and how much they can afford, and what the job will cost and what they expect to get back on resale.

The formula isn't too challenging when a house that's in good shape is about to go on the market: Almost everybody knows that money spent on paint and touch-ups is part of the selling expense. But the medium- to long-term payback of remodeling is murkier. The added value of a remodeling job fades as the materials and appliances wear out. The value of the house is likely to rise anyway, along with the market.

No amount of squinting will reveal a precise vanishing point, but there are strategies for figuring out the biggest bang tomorrow for a buck spent today.

When Angela and Jeff Sprau bought their circa 1928 Tudor house in Whitefish Bay, Wis., in 1995 for $204,000, they knew they were in for some remodeling.

From the start, the house was barely big enough for the couple and their baby. And though they hoped to stay in the house for years, they knew that a corporate relocation might be in the cards.

Over the next 11 years, they tried to calibrate their remodeling decisions to mirror the rapidly escalating expectations of homebuyers -- and fit the changing needs of their growing family.

"I follow the local real estate market, and I knew that adding a master suite and updating the kitchen, especially in a vintage house, would be a big selling point," said Angela Sprau.

Remodeling magazine releases a survey every November that calculates the payback of common remodeling projects upon resale, assuming the house is sold within a year of the completion of the project. Sal Alfano, editorial director for the magazine, says that the one thing that comes through loud and clear is that adding functional space nearly always brings the biggest return.

That assumes that the square footage is "well-designed," said Alfano. "There are a lot of ugly additions out there. If you're in a brick house and you just add a room with vinyl siding onto the side, that won't work. It should be tied to the facade and roof massing and be in scale."

Concocting a design from a wish list of ideas ripped from decorating magazines won't result in a coherent plan, and a schizophrenic house is hard to sell, said Tom Weiher, president of Carmel Builders in Menomonee Falls, Wis.

"You need a design that fits with the current style of the property, to enhance it and expand on it, rather than bringing in something that's a clash. That probably devalues these projects more than anything, not having a complement to what it is that you started with," he said.

There is a limit.

Alfano says the Remodeling magazine survey assumes that the house starts at the size of the typical American house, about 2,300 square feet. Adding a few hundred square feet to a house that size moves it up to the next-biggest category.

"But adding 500 square feet to an 8,000-square-foot house, well, that probably won't pay."

Expanding a house so that it's much bigger than most houses in the neighborhood undermines payback, too.

The sweet spot is adding enough space so that the house is more livable and not so much that it's out of whack with the immediate market.

Not all added space has the same payback.

Finishing a basement is one project that homeowners often expect will pay back in spades, but doesn't, said Alfano.

A simple playroom is viewed as only rudimentary space, but getting fancy gets iffy quickly.

The Spraus' first priority was adding a master suite to their three-bedroom, 1 1/2 -bath home.

In 1999, for $70,000, they built onto an existing second-floor porch, adding a large bedroom with a vaulted ceiling, three closets and a full bath.

Bathrooms bring the biggest value to homebuyers, according to a national analysis of the characteristics and prices of houses sold in 2004 conducted by G. Stacy Sirmans, the Kenneth G. Bacheller Professor of Real Estate at Florida State University in Tallahassee.

"If you're going to build something on, build a bathroom. It has the greatest effect," he said.

Other amenities -- such as fireplaces -- are important to fewer buyers, but those who care, care a lot. Adding a garage, which is really an improvement to the property, not the house, has an even greater impact on buyers.

People don't usually add bathrooms just to keep up with the neighbors. They add them because they'll use them, said Alfano. But everybody wants plenty of bathrooms, so the resale appeal is strong.

Bathrooms usually hold their value because porcelain fixtures, quality plumbing and decent quality tile last for years, Alfano said.

When people add a master bath, they often want fancier finishes or fixtures -- like the multiple shower heads now in vogue -- and figure that future buyers will envision themselves enjoying a little pampering.

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